Price likely to attempt a run above 1.07

22 мар. 2020 г.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

In the early stages of March, price manoeuvred the pair into demand-turned supply at 1.1857/1.1352. Leaving long-term trendline resistance (1.6038) unopposed, the unit has reversed gains and burrowed into demand at 1.0488/1.0912. Sustained downside this week/month may prompt an approach to 0.9581/1.0221, a relatively fresh demand area drawn from 2003.

The primary downtrend remains in motion, trading lower since 2008, exhibiting clear lower peaks and troughs.

Daily timeframe:

Demand at 1.0526/1.0638, coupled with RSI bullish divergence ahead of oversold terrain, elbowed its way into the spotlight Friday. Any upside in the EUR currency from here is likely to be capped by 1.0777, the February 20th low and supply pencilled in at 1.0925/1.0864.

Further slides this week, however, has the 1.0493 February 22nd low to target, closely shaded by the 1.0340 January 3rd low.

Interestingly, the 200-day SMA is also beginning to shows signs of resuming downside after flattening since the beginning of March.

H4 timeframe:

Latest developments on the H4 had price action bottom from a 161.8% Fib ext. level at 1.0651, a level stationed a few points north of demand seen at 1.0602/1.0630. Friday made a beeline for local resistance at 1.0816, which aligned closely with channel support-turned resistance (1.1055).

As evident from the chart, price concluded the week snapping daily gains and recording fresh multi-year lows at 1.0637.

H1 timeframe:

Since Thursday, the H1 candles have been busy carving out a consolidation zone between 1.08/1.0650. As you can see, Friday wrapped up modestly advancing off the lower boundary of the said range and testing the underside of 1.07.

Directly above 1.07, limited supply is evident (blue arrow), with some traders betting on an increase to trendline resistance (1.1189) and possibly 1.08. This is further confirmed by the RSI momentum indicator, recently bottoming ahead of oversold territory and pencilling in bullish divergence.

Structures of Interest:

Long term:

Although monthly price is in the process of chalking up a monstrous bearish engulfing candle, we remain within the walls of demand at 1.0488/1.0912. A similar structural outlook can be seen on the daily timeframe from demand at 1.0526/1.0638 (housed within the current monthly demand), confirmed by the RSI indicator printing bullish divergence.

Short term:

H4 exhibits support from the 161.8% Fib ext. level at 1.0651, closely tied with demand at 1.0602/1.0630 (located within said daily demand). Upside from here, though, could be capped by channel support-turned resistance (1.1055).

On account of the above, H1 action is likely to attempt a run through 1.07 early week, which may entice breakout buying. However, before reaching the upper edge of the H1 range at 1.08, buyers must contend with H4 channel support-turned resistance, a trendline resistance on the H1 and daily resistance at 1.0777.